KKR reports profits plunge in the third quarter as fee income drops

PROFITS at private equity house Kohlberg Kravis Roberts (KKR) plummeted by 61 per cent in the third quarter, a result of its private equity portfolio failing to appreciate and a reduction in its income from fees.

Economic net income was $317.3m (£197m) for the third quarter at the New York-based firm, down from $822.7m in the same period in 2009. The net income figure stood at $1.425bn for the first nine months of 2010, slightly down from a figure of $1.438bn for quarters one to three in 2009.

Assets under management at the firm were at $55.5bn as of 30 September, 2010, an increase of $1.1bn or two per cent on the figure of $54.4bn at the end of the second quarter, and about 10 per cent up on the same date last year.

Income per share was $0.04 for the quarter, well below the level predicted by a panel of analysts, who expected the number to be in the range of $0.45.

Shares in the company, which was founded in 1976 by private equity giants Henry Kravis, Jerome Kohlberg and George Roberts, lost several cents on the New York Stock Exchange, although they were still trading close to their peak of $12.97. KKR had its IPO on 15 July, three years after it was initially planned.